You've probably been through a lot in the last 6 months.
The world certainly has.
Is your estate plan evolving with you?
Transitions in life are constant and inevitable.
So, for global clients with increased complexity around their multi-jurisdictional lives...
An estate plan is a living document.
The last few months (not to mention years) have been more disruptive than usual.
The effects of Covid-19 continuing to change the way we live and work, a war, and other economic and healthcare challenges globally...
Mean the topic of succession planning has become even more relevant.
Add to this the imminent intergenerational wealth transfer, which is expected to place trillions of dollars in the hands of millennials over the next decade...
And questions are raised around inheritance and succession laws, suitability of wealth structures and their potential implications.
Whatever decision a family chooses may be in part influenced by global economic and political events, but legal and regulatory changes at domestic levels may also influence these decisions.
Regular reviews work much like health checkups.
They can ensure your plan is working and that you’re catching any potential problems early.
Crucial moments of transition happen more often than you might think...
And may shape your entire future (or the future of your loved ones).
Below are just 5 scenarios.
At this mid point in the year, ask yourself...
Have you been affected by any?
1. A marriage or divorce
A change in your marital status will likely change where you want your assets to go upon your death and who will be in charge of your financial affairs in the event of your death or incapacity.
Typically, you may name different individuals to act as your executor, trustee, and agent under your powers of attorney for healthcare and property.
2. Losing a loved one
Similar to a marital status change, the loss of a loved one may affect who you want to receive your assets upon your death.
Based on the circumstances of the passing, we often see survivors who want to name charitable organisations surrounding their loved one’s illness.
3. A move to a new country
If you moved recently, you may wonder whether your old estate documents will work in your new location.
Each country also has its own unique estate and tax laws, which create nuances in how wills and trusts can be drafted to best take advantage of the differences.
Planning ahead means you can make sure that your money is protected and ends up in the right hands, while avoiding unnecessary expat taxes.
4. A child coming of age
If your child is 18 or older, they should have their own estate planning documents drafted (at the very least, powers of attorney for health and property giving you the ability to act on their behalf as their agent).
Without these documents in place, should something happen to your child while they are at college or otherwise living on their own, you may be unable to manage their financial affairs, assist them with important medical decisions – or find yourself in a situation when a hospital may not share important health information with you.
As children grow older and more mature, parents often name them to act as their executor, trustee, or power of attorney agent.
Occasionally, we also see parents changing the distribution provisions of their estates – either to accelerate or further postpone access to assets.
5. A change in tax laws
Inheritance tax (IHT) is arguably subject to more criticism than any other tax.
Often referred to colloquially as “death tax”, it is a levy that is placed on estates that are worth more than the IHT threshold.
If you’re British, or you have assets in Britain, there was a change earlier this year in how IHT is administered.
As of January, there are no mandatory requirements for reporting for any estate which falls below the IHT threshold. This means if an estate is worth less than £325,000, the executors will no longer have to file IHT paperwork.
In addition, there will no longer be a need for physical signatures on an IHT return for any issues relating to either the estate or a trust. This change was introduced as a temporary measure due to the global pandemic but from January 2022, it was made permanent.
HMRC has also defined what it means to be a "spouse" or civil partner" (up until this guidance, there was no definition within IHT for spouses and civil partners so the general law definition has been used).
There are likely many more changes to come.
These are just a few issues that could warrant an update to your estate plan.
That’s why it’s important to have an ongoing relationship with a financial planner who can help you make changes and ensure that your plan is cohesive and workable.
Communication about your estate plan should be a two-way street.
You should let your financial planner know about any changes in your life...
While your financial planner should communicate with you about any external forces that could affect your plan.
Doing so can help you – and ultimately, your heirs – carry out your final wishes.
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